Here's Everything You Need to Know About Apple's (AAPL) Nearly $100 Billion Cash Hoard
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Price: $166.90 --0%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
EPS Growth %: -0.7%
Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.5%
EPS Growth %: -0.7%
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Apple (Nasdaq: AAPL) ended 2011 with cash and marketable securities of $97.6 billion, or about $105 per share. As would be expected, everyone wants to know what the company will do with the massive cash hoard.
On its conference call, comments from management on the cash indicated that they are nearly ready to move although they had nothing specific to report. The company said discussions on the cash are "active" but it won't "burn a hole in our pockets."
A significant portion of Apple's cash is offshore - $64 billion, or 66% of the total.
Here is everything you need to know about Apple's cash hoard based on comments and questions from the conference call and comments from analysts today:
CONFERENCE CALL:
Prepared Statement:
Turning to our cash, our cash plus short term and long-term marketable securities totaled $97.6 billion at the end of the December quarter, compared to $81.6 billion at the end of the September quarter, a sequential increase of $16 billion. About $64 billion of the cash was offshore at the end of the December quarter. Cash flow from operations was over $17.5 billion. We are actively discussing uses of our cash balance and don't have anything specific to announce today. In the meantime, we continue to be very disciplined with the cash and are not letting it burn a hole in our pockets.
From the Q&A:
Q - Toni M. Sacconaghi: Yes, thank you. Peter or Tim, I'd like to follow up on your comment that you're actively discussing uses of cash. Is that any different, quite frankly, than what you have been doing historically, or is that statement meant to suggest that you're thinking more constructively about cash than you have historically?
A - Peter Oppenheimer: Toni, it's Peter. We have always discussed internally as a management team and with our board, our cash. We recognize that the cash is growing for all of the right reasons, and I would characterize our discussions today as active about what makes the most sense to do with the cash balance. But we don't have anything to announce specifically today.
Q - Toni M. Sacconaghi: Is there a timeframe or will you actually tell us that you have finished those discussions, or is there a process for which there is an ending and you will inform us about that?
A - Peter Oppenheimer: When we have something to announce, Toni, we will announce it. But I want to say again that we are actively discussing the best uses of our cash balance.
Q - Keith F. Bachman: Hi. Thank you. Peter, to start with you, when you talked about the cash balances that you'll announce something when you announce it, but you give us a little perspective on how at least you're framing the differences, opportunities, in terms of dividends and buybacks?
A - Peter Oppenheimer: Keith, we're examining all uses of our cash balance. What we might do in the supply chain, what we can do from an acquisition perspective, and otherwise. And so I don't have any perspective to share with you today specifically on dividends or buybacks, other than again we are actively discussing the cash balance. And in the meantime, we're not letting it burn a hole in our pockets.
Q - Shannon S. Cross>: Thank you very much. Tim, I had a question - and actually, Peter - I realize you're not going to talk specifically about cash, but with regard to acquisitions, perhaps you can talk a little bit about your strategy behind some of the acquisitions including the most recent one which was Anobit.
A - Peter Oppenheimer: Shannon, we have done acquisitions where they tended to be smaller or medium-sized companies that have just great engineering and other talent, a great start on a product or a technology that we'd like to bring into Apple, and sometimes including IP. And that's really the acquisitions that we have done. We tend to do several a year. We're very, very disciplined in how we think about this and how we do it, and I think our track record here has been very strong.
ANALYST COMMENTS:
Jefferies - We expect a dividend later this year: with ~$100 per share (~$97B) of cash and our estimate of $150/share ($142B) by year end, we believe a dividend becomes even more likely. Also, we believe Apple's board realizes that it needs to increase its potential investor base in order to achieve a >$500B market cap. We believe that having a dividend could increase Apple's available capital pool by 3x to 4x
Canaccord - We believe Apple is likely to announce a dividend during 2012, potentially next quarter when crossing $100B in cash and cash equivalents. We view this as very bullish for investors, as we believe a new group of investors seeking dividends would invest in Apple and drive shares higher.
Oppenheimer - Cash plus investments now total $98B with Apple adding $16B QoQ and $38B YoY. Management revealed nothing new on possible uses for this quickly growing asset. That said, we don't see how AAPL doesn't move forward with a dividend program and possibly share buybacks.
Goldman Sachs - While the company's top priority is to fund strategic investments, with $104.83 in cash and long-term investments per share, we believe discussion around a substantial dividend or share repurchase plan could heat up. This could be a critical catalyst for the stock, and we still expect a dividend announcement in 2012.
On its conference call, comments from management on the cash indicated that they are nearly ready to move although they had nothing specific to report. The company said discussions on the cash are "active" but it won't "burn a hole in our pockets."
A significant portion of Apple's cash is offshore - $64 billion, or 66% of the total.
Here is everything you need to know about Apple's cash hoard based on comments and questions from the conference call and comments from analysts today:
CONFERENCE CALL:
Prepared Statement:
Turning to our cash, our cash plus short term and long-term marketable securities totaled $97.6 billion at the end of the December quarter, compared to $81.6 billion at the end of the September quarter, a sequential increase of $16 billion. About $64 billion of the cash was offshore at the end of the December quarter. Cash flow from operations was over $17.5 billion. We are actively discussing uses of our cash balance and don't have anything specific to announce today. In the meantime, we continue to be very disciplined with the cash and are not letting it burn a hole in our pockets.
From the Q&A:
Q - Toni M. Sacconaghi: Yes, thank you. Peter or Tim, I'd like to follow up on your comment that you're actively discussing uses of cash. Is that any different, quite frankly, than what you have been doing historically, or is that statement meant to suggest that you're thinking more constructively about cash than you have historically?
A - Peter Oppenheimer: Toni, it's Peter. We have always discussed internally as a management team and with our board, our cash. We recognize that the cash is growing for all of the right reasons, and I would characterize our discussions today as active about what makes the most sense to do with the cash balance. But we don't have anything to announce specifically today.
Q - Toni M. Sacconaghi: Is there a timeframe or will you actually tell us that you have finished those discussions, or is there a process for which there is an ending and you will inform us about that?
A - Peter Oppenheimer: When we have something to announce, Toni, we will announce it. But I want to say again that we are actively discussing the best uses of our cash balance.
Q - Keith F. Bachman: Hi. Thank you. Peter, to start with you, when you talked about the cash balances that you'll announce something when you announce it, but you give us a little perspective on how at least you're framing the differences, opportunities, in terms of dividends and buybacks?
A - Peter Oppenheimer: Keith, we're examining all uses of our cash balance. What we might do in the supply chain, what we can do from an acquisition perspective, and otherwise. And so I don't have any perspective to share with you today specifically on dividends or buybacks, other than again we are actively discussing the cash balance. And in the meantime, we're not letting it burn a hole in our pockets.
Q - Shannon S. Cross>: Thank you very much. Tim, I had a question - and actually, Peter - I realize you're not going to talk specifically about cash, but with regard to acquisitions, perhaps you can talk a little bit about your strategy behind some of the acquisitions including the most recent one which was Anobit.
A - Peter Oppenheimer: Shannon, we have done acquisitions where they tended to be smaller or medium-sized companies that have just great engineering and other talent, a great start on a product or a technology that we'd like to bring into Apple, and sometimes including IP. And that's really the acquisitions that we have done. We tend to do several a year. We're very, very disciplined in how we think about this and how we do it, and I think our track record here has been very strong.
ANALYST COMMENTS:
Jefferies - We expect a dividend later this year: with ~$100 per share (~$97B) of cash and our estimate of $150/share ($142B) by year end, we believe a dividend becomes even more likely. Also, we believe Apple's board realizes that it needs to increase its potential investor base in order to achieve a >$500B market cap. We believe that having a dividend could increase Apple's available capital pool by 3x to 4x
Canaccord - We believe Apple is likely to announce a dividend during 2012, potentially next quarter when crossing $100B in cash and cash equivalents. We view this as very bullish for investors, as we believe a new group of investors seeking dividends would invest in Apple and drive shares higher.
Oppenheimer - Cash plus investments now total $98B with Apple adding $16B QoQ and $38B YoY. Management revealed nothing new on possible uses for this quickly growing asset. That said, we don't see how AAPL doesn't move forward with a dividend program and possibly share buybacks.
Goldman Sachs - While the company's top priority is to fund strategic investments, with $104.83 in cash and long-term investments per share, we believe discussion around a substantial dividend or share repurchase plan could heat up. This could be a critical catalyst for the stock, and we still expect a dividend announcement in 2012.
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